Companies which have sprung up and are using the service illegally are costing the legal telecoms companies big bucks.

Only four companies — ATS Telecom, United Telecom, Nepal Telecom and Spice Nepal Ltd have licences to operate VoIP services and they are suffering at the hands of a number of illgeal operators.

Lost revenue totals more than two million US dollars (NPR160 million) per month, according to the parliament’s Public Account Committee.

Rajendra Singh Bhandari, the Deputy Inspector General of Nepal Police said in a statement: "Illegal VoIP channels are eating up huge amount of revenue and account for calls worth two million minutes. They are also posing the country of Nepal with serious security threats."

Nepal has attemped a crackdown, but black market VoIP providers are hard to track down. Although they have shut down around 160 operations, 5 still remain.

Jay Mukunda Khanal, the joint Home Ministry secretary, explained that VoIP accounts for great revnue loss and can also be used by organised crime outfits to commit fraud.

Companies breaking the law can be tried under Article 47 of 1997 Nepal Doorsanchar Act. It states that doing anything harmful to the telecom system or its equipment with malicious intent is a punishable crime with a fine or jail time.